Cambridge A Level Business 9609

Business formulas

There is no formula sheet in Cambridge A Level Business 9609. Every ratio and calculation has to be memorised — the 48 below cover break-even, budgets and market share at AS, and at A Level the profit statement, the liquidity, profitability, efficiency and gearing ratios, investment appraisal, elasticity, decision trees, critical path analysis and the people and capacity measures.

On the papers Quanta holds, calculation questions are worth 2 or 3 marks, and mark schemes credit correct working even when the final figure is wrong — so write the formula and your substitution down before you touch the calculator.

Updated 28 September 2026

Every formula, by syllabus area

Grouped by syllabus area; A Level sections carry their syllabus number in brackets so you can find them in your notes.

Costs and break-even

Contribution per unit	$Price - Variable cost per unit$
Total contribution	$Contribution per unit \times Units sold$
Profit	$Total contribution - Fixed costs$
Break-even output	$\frac{Fixed costs}{Contribution per unit}$	Round up — a part-unit does not break even.
Margin of safety	$Actual output - Break-even output$

Budgets

Variance

Actual - Budgeted

Favourable if it raises profit (revenue above, or cost below, budget); adverse if it lowers it.

Market share and growth

Market share	$\frac{Business’s sales}{Total market sales} \times 100$
Market growth	$\frac{Change in market size}{Original market size} \times 100$

Statement of profit or loss (10.1)

Gross profit	$Revenue - Cost of sales$
Operating profit	$Gross profit - Overheads$
Profit before tax	$Operating profit - Interest paid$
Profit for the year	$Profit before tax - Corporation tax$
Retained earnings	$Profit for the year - Dividends$
Net realisable value	$Selling price - Cost of selling$	Inventory is valued at the LOWER of historic cost and NRV.
Straight-line depreciation	$\frac{Initial cost - Residual value}{Useful life}$

Liquidity (10.2)

Current ratio	$\frac{Current assets}{Current liabilities}$	Quoted as a ratio, e.g. 2:1. Below 1 is a squeeze; above 3–4 is idle capital.
Acid-test ratio	$\frac{Current assets - Inventories}{Current liabilities}$	Selling inventory for cash improves this but not the current ratio.

Profitability (10.2)

Gross profit margin	$\frac{Gross profit}{Revenue} \times 100$
Operating profit margin	$\frac{Operating profit}{Revenue} \times 100$
Return on capital employed	$\frac{Operating profit}{Capital employed} \times 100$
Capital employed	$Non-current liabilities + Shareholders’ equity$

Financial efficiency (10.2)

Inventory turnover	$\frac{Cost of sales}{Average inventory}$	Answer is a number of times per year.
Average inventory	$\frac{Opening + Closing}{2}$
Trade receivables turnover	$\frac{Trade receivables}{Credit sales} \times 365$	Days. Lower is better.
Trade payables turnover	$\frac{Trade payables}{Credit purchases} \times 365$	Days. Higher is better.

Gearing and investor ratios (10.2)

Gearing ratio	$\frac{Non-current liabilities}{Capital employed} \times 100$	Typical range 35–65%. Above 65% is high risk, high growth.
Dividend yield	$\frac{Dividend per share}{Market share price} \times 100$
Dividend per share	$\frac{Total annual dividends}{Issued shares}$
Dividend cover	$\frac{Profit for the year}{Total annual dividends}$
Price/earnings ratio	$\frac{Market price per share}{Earnings per share}$
Earnings per share	$\frac{Profit for the year}{Issued shares}$

Investment appraisal (10.3)

Payback period	$Full years + \frac{Cost still to recover}{Cash flow that year} \times 12$	Assumes cash flows accrue evenly through the year.
Accounting rate of return	$\frac{Average annual profit}{Average investment} \times 100$
Average annual profit	$\frac{Total net cash flow - Initial investment}{Lifespan}$
Average investment	$\frac{Initial cost + Residual value}{2}$
Net present value	$\sum Discounted cash flows - Initial cost$
Present value	$Future cash flow \times Discount factor$

Marketing analysis (8.1)

Price elasticity of demand	$\frac{% Δ quantity demanded}{% Δ price}$	Ignore the minus sign when classifying. Below 1 inelastic, above 1 elastic.
Income elasticity of demand	$\frac{% Δ quantity demanded}{% Δ income}$	Negative means an inferior good. Large positive means a luxury.
Promotional elasticity of demand	$\frac{% Δ quantity demanded}{% Δ promotional spend}$

Decision trees (6.2)

Expected value	$\sum (probability \times economic return)$	Calculate right to left; decide left to right.
Net gain	$Expected value - Cost of that option$

Critical path analysis (9.3)

Total float	$LFT - duration - EST$	Zero total float means the activity is on the critical path.
Free float	${EST}_{next} - duration - {EST}_{this}$

People (7.4)

Labour productivity	$\frac{Total output}{Average number of workers}$	In services, substitute a volume proxy — guest-nights per employee per year.
Absenteeism rate	$\frac{Days absent}{Total workdays} \times 100$
Labour turnover	$\frac{Staff leaving}{Average number of staff} \times 100$

Capacity (4.3)

Capacity utilisation

\frac{Current output}{Maximum output} \times 100

Getting the marks

Show the formula, then the substitution, then the answer. On a 3-mark calculation the method marks are usually for the first two.
Units and form matter. Ratios such as the current ratio are written as 1.4 : 1; margins and returns as percentages; payback in years and months.
A number is not an answer on a longer question. On an 8 or 12-mark question the calculation only opens the door — the marks are in what the figure means for this business. How to answer a 12-marker →
Break-even: contribution per unit is price minus variable cost per unit, and break-even output is fixed costs divided by that. Break-even analysis guide →

Common questions

Do you get a formula sheet in A Level Business 9609?

No. Cambridge issues no formula sheet for Business, so every ratio, the investment appraisal methods and the elasticity formulas all have to be learned.

Which Business formulas come up most?

On the 38 papers Quanta holds — almost all AS Papers 1 and 2 — the calculations set most often were profit, budget variances, break-even and margin of safety, labour turnover, market share and capacity utilisation. The A Level ratios and investment appraisal are A Level content, examined on Papers 3 and 4.

Is a calculator allowed in 9609?

Yes. A calculator is allowed on every 9609 paper — but it will not remember the formula for you.

Practise business formulas against real mark schemes

Quanta has real Cambridge A Level Business 9609 past-paper questions, with the case study beside the answer boxes, every answer marked automatically against the published mark scheme objective by objective, and the reasoning shown — and it tracks which skills you’re missing. Free for individual students.

Start practising free